The Financial Conduct Authority's (FCA) proposed pensions dashboards regulatory framework could put dashboards providers in “prime position in dash for defined contribution (DC) cash”, LCP partner, Steve Webb, has stated

The regulatory framework, which will govern the activities of companies who will operate pensions dashboards, is set to give a “huge advantage” to DC consolidators who set up their own dashboards, according to Webb.

Webb explained that one key feature of pensions dashboards will be the ability of users to “export” their data, noting that although dashboard providers may choose not to offer this facility, it seems “highly likely” that many will offer the user to the ability to download their own data and also to export the data to the provider’s site.

Although the FCA consultation acknowledged that this raises potential risks, it said there would be problems if users could not export their own data, including the risk that people would use ‘DIY’ methods such as taking screen captures of their data and then sharing it in a much less secure and less controlled way.

In light of this, the FCA rules proposed only two places where the user could export their data, either export to themselves or export to the dashboard provider.

Given the large number of fragmented pension pots, Webb suggested that it is widely expected that one consequence of the launch of pensions dashboards is that individuals will be prompted to consolidate their DC pensions with a single provider.

However, he clarified that if the only direct way in which consumer data can be exported to a provider is if they operate a pensions dashboard, this will put such providers at a head start when it comes to ‘harvesting’ DC pots.

Webb commented: “When pensions dashboards become available to the public it seems highly likely that this will drive member consolidation of their DC pensions with a single provider.

“If users of a dashboard can press a button and export their data into attractive tools, offered by the dashboard provider, this will ‘hook them in’ to engaging with that provider and greatly increase the chance that any DC consolidation is to that provider.”

Webb went on to state that this could put dashboard providers in prime position compared with other consolidators who would have to get users to download data – possibly from a rival’s dashboard - and then re-upload it to a different site.

“We are very likely to see a ‘dash for DC cash’ when dashboards go live, and the restrictions on data export mean providers who set up their own dashboard are likely to be the winners of that race” he continued.

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